The UK retail industry has witnessed a 10% drop in cash use in 2012, according to a survey report published by British Retail Consortium (BRC).

The Cost of Payment Collection Survey revealed that the advent of technology and changes in the shopping format are primarily behind the drop in cash usage.

Although 54.4% of transactions were paid in cash, the number of transactions was down by 6.7% along with and 9.7% decline in value.

The drop in both the number of transactions and money spent were noted for the first time in 13 years of survey history.

British Retail Consortium director general Helen Dickinson remarked that the launch of new payment and shopping methods are revolutionising the retail sector in the UK.

"Changing customer preferences are driving the increase in debit card use – they’re helping people to manage their money better and are a natural fit for online shopping and self-service checkouts," added Dickinson.

"Cash is still the most popular way to pay, but our survey shows how rapidly alternative and emerging methods are gaining ground, with growth more than doubling on the previous year, albeit from a low base."

The survey also disclosed that debit cards and new payment services such as PayPal have gained from the changing shopping methods with surge in online and self-service shopping.

However, customers preferance of debit cards over credit cards was evident from 3.2% rise in transactions made from debit cards.

Credit and charge card use was down by 3.4% as a percentage of transactions, the survey reported.

The survey also validates unfair charges levied by banks on retailers for handling card payments.

The retailers had to face payment processing charges of 25 times higher than for cash upon using a credit.

"Retailers have been arguing this in court for more than a decade now, and a resolution to the case is long overdue. The right conclusion would reduce these excessive costs for retailers and support their ability to invest and innovate," explained Dickinson.